CALIFORNIA BUSINESS MINUTE
Regulatory Costs
10-05-09
Hi, I am Tim Johnson and welcome to the California Business Minute.
The total cost of state regulations on businesses is $493 billion and 3.8 million
jobs according to the first-of-its kind study.
That’s an average of $134,122 per California business, $13,801 per household and
$4,685 per resident each year. The California report is significant, according to
the Governor’s Office of Small Business Advocate, because small businesses are 98
percent of the state’s enterprises and provide 52 percent of the jobs.
The study parallels a 2005 federal report on business regulations commissioned by
the Office of Advocacy within the U.S. Small Business Administration. That report
concluded that federal regulations cost $7,647 per employee for businesses with
fewer than 20 employees.
This state report is based on data used by Forbes magazine’s annual ranking of
state for business friendliness. However, it does not single out specific regulations
that drive up costs.
Among the California conclusions:
• The total cost ($493 billion) is almost five times the state’s general fund
budget and a third of the state’s gross product
• The 3.8 million jobs lost equals one-tenth of California’s population. California
has about 14 million jobs, down 1 million from the peak in July 2007
• The total cost breakdown is $266.5 billion in direct costs of various regulations,
$210.5 billion lost labor income and $16 billion in business taxes the state would
get without the regulations
The study was done by Sanjay Varshney, dean of business administration, and Dennis
Tootelian, director of the Center for Small Business at California State University,
Sacramento.
I am Tim Johnson and this has been the California Business Minute.
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